Private Equity's Role in Powering the Energy Transition

The Private Equity Energy Landscape: From Competition to Integration

Where investors once faced an "either/or" choice between conventional and renewable energy, today's approach embraces "both/and" thinking. The new model requires sustained investment across the entire energy spectrum, with traditional assets providing cash flow and stability while renewable technologies drive growth and long-term value creation.

Powerful forces are accelerating this integrated approach.

European policies have helped establish predictable revenue streams that reduce risk and attract institutional capital. EU climate targets and recovery funding programs are channeling billions toward solar, wind, hydrogen, and grid infrastructure.

Meanwhile, global security considerations have added urgency to energy diversification. Geopolitical tensions have prompted governments and investors to prioritize energy independence and supply resilience.

Security concerns encompass mineral supply chains for batteries and solar panels, hydrogen infrastructure for industrial decarbonization, and electricity grid resilience.

For private equity, these policies and security concerns translate into portfolio decisions that balance geographic exposure, technology risk, and regulatory frameworks across jurisdictions.

Private Equity's Strategic Evolution

Private equity's role in the energy sector has evolved. Early venture-style bets on unproven technologies have given way to portfolio construction that integrates assets across the energy value chain.

Energy-focused PE firms recognize that mature renewable projects offer infrastructure-like returns, while traditional energy assets in the right markets continue to generate substantial cash flows that can fund innovation and growth.

This approach enables PE firms to harvest value from the energy transition itself—profiting from both the legacy infrastructure that must be maintained during the transition and the new assets that will ultimately replace it. For example, the same fund could support a gas-fired peaking plant in the UK, which burns natural gas to generate electricity during periods of high demand and generates steady revenues, while developing battery storage projects that will eventually displace those fossil fuel peaking plants.

Investors must evaluate not only traditional energy market risks—commodity prices, demand fluctuations, operational performance—but also transition-specific risks, including policy volatility, technology obsolescence, and shifting social license.

Investment Thesis Transformation

Capital allocation patterns across the energy sector reveal the depth of this transformation.

While oil and gas continue to attract substantial investment—particularly in Norway, where operational expertise and resource quality remain world-class—the growth capital is increasingly flowing toward hydrogen, wind, nuclear, solar, and geothermal projects.

The UK saw nearly $8 billion in PE/VC investment flow into renewable energy companies in the first nine months of 2024. Italy's first FER X auction in September 2025 drew over 12 GW of project bids—as much as 10 times the available capacity.

Hydrogen is emerging as a strategic focus.

• The UK's Project Hyspeed consortium plans to mobilize £6.5 billion in private capital to build 1 GW of low-carbon hydrogen capacity by 2030.
• Italy targets 5 GW of electrolyser capacity in that same timeframe.
• Norway's Aker Horizons, despite scaling back some domestic initiatives, continues to invest in hydrogen platforms with export potential.

These investments reflect a belief in hydrogen’s essential role in decarbonizing heavy industry, long-haul transport, and seasonal energy storage.

Infrastructure investments are equally critical to the transition. Private equity is increasingly targeting:

• Electricity transmission and distribution networks
• Energy storage systems
• EV charging infrastructure
• Hydrogen distribution pipelines

Norway's sovereign wealth fund exemplifies this approach with its €4.5 billion investment in the Dutch/German grid operator TenneT. The fund recognizes that transmission capacity is often the binding constraint on renewable energy deployment.

Regional Perspectives: European Leadership in Energy Transition

The energy transition is manifesting differently across Europe, shaped by each region's energy heritage, natural resources, policy frameworks, and industrial structures. Both investors seeking attractive opportunities and leaders navigating complex energy markets must understand the regional dynamics.

Let’s look at four distinct European markets.

United Kingdom: Balancing Heritage and Innovation

“The UK’s energy market stands at a pivotal crossroads, where the legacy of North Sea oil and gas must be thoughtfully balanced with the nation’s leadership in offshore wind and renewables,” John Cameron, Boyden Managing Partner, United Kingdom.

“As record investment and policy support accelerate the shift to clean energy, the sector’s success depends on leaders who can bridge both worlds—guiding a measured, pragmatic transition from hydrocarbons to renewables, navigating complex regulatory and financial environments, and ensuring that the UK’s energy future is both secure and sustainable.”

In 2024, renewables supplied a record 50.8% of UK electricity, with wind power alone accounting for nearly 30% of generation. The 2024 CfD auction secured 9.6 GW of new capacity, including 4.9 GW of offshore wind projects and a 400 MW of floating wind development. These projects represent billions in capital deployment and thousands of jobs.

The PE outlook: Skills gap at senior levels
Private equity has responded enthusiastically to these opportunities.

The $7.87 billion acquisition of Atlantica Sustainable Infrastructure by Energy Capital Partners represented the dominant share of the $8 billion that flowed into UK renewables through September 2024.

London-based PE firms and infrastructure funds are building substantial renewable platforms, often combining onshore solar, offshore wind, and battery storage into integrated portfolios.

This transition is creating acute demand for hybrid leaders.

The UK faces a green economy skills gap of approximately 200,000 roles, with particular shortages at senior levels. PE-backed renewable platforms urgently need executives who combine technical energy expertise with financial acumen.

“The most valuable leaders understand both worlds,” Cameron says. “They can evaluate the commercial viability of legacy energy assets while identifying opportunities for new renewable technologies. They navigate the complexities of planning and regulatory approvals across both traditional and emerging energy projects. And they are adept at structuring commercial agreements and managing market risks, ensuring value creation across a diverse and evolving portfolio.”

Norway: The Sovereign Wealth Model

Norway's energy story is unique. For decades, the country has managed its North Sea oil wealth to help it build one of the world's largest sovereign wealth funds while maintaining strong environmental credentials.

Today, Norway is trying to leverage that oil-derived capital in renewable energy. The Norwegian Government Pension Fund Global continues to play a significant global role in energy transition finance through investments like:

• €4.5 billion TenneT, as part of a consortium that will deploy up to €9.5 billion to modernize Germany's grid
• $1.5 billion to Brookfield's Global Transition Fund II
• $8.4 billion investment in renewable infrastructure.

The PE outlook: Carbon capture’s potential
Norway's domestic renewable investment climate has grown more challenging.

The introduction and subsequent increases of resource rent taxes on hydropower and onshore wind, combined with higher dividend and wealth taxes, have made Norway less competitive compared to markets like Germany and the Netherlands, which offer more predictable incentive structures.

These pressures are evident in recent corporate decisions. Statkraft announced a strategic shift away from emerging technologies to focus on core renewable assets. Aker Horizons and Mainstream Renewable Power withdrew from key Norwegian projects, citing regulatory uncertainty. Even as Norway invests abroad, domestic capital is flowing toward traditional oil and gas, where operational expertise remains world-class and returns are robust.

Kjetil Haug-Nodeland, Boyden Managing Partner, Norway, gives this assessment of the current situation: “I see very few technologies attracting significant investment. Hydrogen is being adopted for ferries and local transport, but only on a small scale.”

“Carbon capture and storage, however, represent the greatest potential for Norway,” he says, noting the launch of the Northern Lights-Longship project, the world’s first industrial CO2 capture and storage (CCS) project.

“We are building on decades of experience from the oil and gas industry, leveraging existing infrastructure and world-leading expertise to position Norway as a key player in carbon storage in Europe.”

Denmark: Wind Energy Setbacks

Denmark's offshore wind sector, once celebrated for sustained commitment and first-mover advantage, is now navigating severe industry headwinds.

The world's largest offshore wind developer, Ørsted, plans to cut 25% of its workforce—about 2,000 jobs—by the end of 2027. The Danish company had previously cancelled plans to build what would have been one of the UK’s largest offshore windfarms.

The Danish wind manufacturer Vestas has shelved plans for a large factory in Poland, which would have produced blades and created over 1,000 jobs.

These cuts reflect political uncertainty—particularly from the Trump administration's actions against offshore wind projects in the United States. They also are a reaction to supply chain bottlenecks, rising interest rates, and soaring costs in the industry’s global supply chain.

The crisis triggered a significant leadership change at Ørsted. In 2025, CEO Mads Nipper stepped down after four years and was replaced by Rasmus Errboe, the former CFO and Deputy CEO. Errboe's background—leading Ørsted's IPO, divested its oil and gas business, and serving as CFO for offshore operations—positions him to navigate financial restructuring and margin improvement in a contracting market.

Morten Winther, Boyden Managing Partner, Denmark, says: “This succession clearly signaled new priorities: cost discipline, risk management, and operational efficiency over growth and expansion.”

The PE outlook: Uncertainty
For private equity, Denmark now represents a cautionary tale about transition timing and policy risk. The sector's struggles demand leaders who can manage political uncertainty across jurisdictions, particularly navigating the volatility of US renewable energy policy.

Errboe acknowledged that toward the end of the decade, the industry could see periods with little or no new offshore wind projects, though he remained optimistic about long-term fundamentals driven by European energy security needs.

Italy: Mediterranean Energy Hub

Italy represents one of Europe's most dynamic energy transition markets, characterized by rapid solar deployment, emerging cross-border infrastructure opportunities, and complex regulatory challenges. Historically dependent on natural gas imports for roughly half its electricity generation, Italy is accelerating renewable development to improve energy security and meet EU decarbonization targets.

Solar PV has emerged as Italy's renewable energy success story.

The country added 6.8 GW of new solar capacity in 2024 alone, leveraging abundant sunshine in southern regions and increasingly attractive economics. Italy's first FER X Contracts for Difference (CfD) auction drew over 12 GW of project bids for just a fraction of that capacity, demonstrating strong developer appetite.

The PE outlook: Solar Momentum
Private equity is deeply engaged in Italy's solar and wind buildout.

• Capital Dynamics developed and sold a 225 MW subsidy-free solar portfolio to Sonnedix, demonstrating viable project economics without government support.
• Ardian acquired 117 solar plants (116 MW), doubling its Italian renewable footprint.
• Qualitas Energy and Mirova launched a 250 MW Italian renewables platform.

These transactions reflect PE's role in both greenfield development and consolidation of operating assets, often structured around long-term PPAs or Italy's evolving incentive schemes.

Italy's strategic position as a Mediterranean energy hub creates unique opportunities.

The country is central to the planned Southern Hydrogen Corridor—a 3,500-4,000 km pipeline network designed to transport hydrogen from North Africa through Italy into Central Europe. The Elemed HVDC interconnector between Italy and Tunisia (600 MW) will enable renewable electricity imports. These cross-border infrastructure investments position Italy as a crucial link between North African renewable resources and European demand.

Yet Italy's energy market still presents several challenges, including:

• Slow and complex permitting processes.
• Grid constraints that limit renewable integration.
• A regulatory framework that requires careful management.
• Local opposition to large-scale renewable projects that delays or derails developments.

Giulia Teodori, Boyden Partner, Italy, says the nation’s “transformation into a Mediterranean energy hub demands leaders who can navigate complexity with confidence.”

“The capital is there, the ambition is clear, and Italy’s strategic geography gives it a pivotal role in connecting North African resources to European demand,” Teodori explains. “But the full value of this transition will only be unlocked by executives who can align technology, policy, and investment into a cohesive growth strategy, turning challenges into catalysts for sustainable infrastructure, industrial competitiveness, and long-term value creation.”

Leadership Imperatives in the Private Equity Energy Transition

The demands on leaders in the energy sector have never been greater—or more consequential.

PE firms need executives who can navigate unprecedented complexity, manage competing stakeholder demands, and drive organizational transformation while maintaining financial discipline.

Multi-faceted Expertise

Today's energy leaders must master two distinct but interconnected domains.

First, they need deep expertise in traditional energy operations: the technical, commercial, and regulatory dynamics of oil, gas, coal, and conventional power generation. These assets will be part of the energy system for decades. They generate the cash flow that funds the transition, and operational excellence in traditional energy translates to renewable platforms.

Second, leaders must understand renewable energy systems:

• The performance characteristics of wind turbines and solar panels.
• The dispatch logic of battery storage.
• The production economics of green hydrogen.
• The power purchase agreement structures that underpin project finance.
• The technology that can drive down costs and provide new solutions.

The intersection of these competencies is where value is created.

A leader who understands both natural gas peaking plants and battery storage can make informed decisions about when to retire, repower, or repurpose thermal assets. An executive who knows both refinery operations and hydrogen production can identify opportunities to decarbonize industrial processes while maintaining product quality. A CFO who has modeled both commodity price risk and renewable capacity factors can structure portfolios that balance stability and growth.

In the energy sector, PE/VC firms might struggle with exit strategies as energy assets evolve. Traditional buyers disappear while renewable markets remain fragmented, and regulatory uncertainty makes valuations volatile, complicating IPOs and trade sales.

Leaders must integrate these different valuation frameworks, allocate capital across the portfolio, and communicate the investment thesis to boards and investors with varying risk appetites and time horizons.

Regulatory navigation across multiple energy subsectors presents another layer of complexity. Oil and gas operations are governed by one set of rules; renewable energy projects by another; hydrogen by yet another that is still being developed. Each jurisdiction has its own permitting processes, incentive structures, and compliance requirements.

Leaders must build organizations capable of managing this regulatory web, often maintaining separate teams with specialized expertise while ensuring coordination across business units.

Wide-ranging capabilities

Leaders require an almost endless list of qualifications to direct private equity’s role in powering the energy transition. Here are three other areas to consider.

• Risk management and adaptability. Risk management has always been central to energy leadership. Climate change imperatives require constant adaptation strategies. Energy markets are volatile, influenced by weather, geopolitical events, policy shifts, and technology disruptions. Perhaps the most challenging risk management task is maintaining financial growth while reducing carbon footprint.
• Stakeholder management. Energy transition amplifies the difficulties of stakeholder management. Investor relations now span traditional institutional investors focused on cash returns, ESG-focused funds with explicit sustainability mandates, and impact investors seeking measurable environmental outcomes. Government relations cut across numerous agencies and jurisdictions. Community engagement for large-scale infrastructure projects has become a critical success factor. And leaders must manage global supply chains while addressing concerns about carbon intensity, labor practices, and geopolitical risk embedded in the energy supply chains themselves.
• Innovation and technology leadership. Technology is the fundamental enabler of energy transition, and leaders must be capable technology strategists. Not every promising technology will succeed. Leaders must assess which innovations to pursue, at what scale, and through what vehicles—internal development, partnerships, acquisitions, or venture investments. Leaders must allocate limited R&D budgets while managing boards and investors who may be skeptical of long-term, high-risk technology bets.

Looking Forward: The Next Decade of  Energy Leadership

The demands on leaders in the energy transition are likely to intensify. It’s clear that organizations must invest in leadership development now to build the capabilities they will need throughout this transition.

This means:

• Recruiting and developing leaders with dual competencies.
• Creating opportunities for executives to gain experience across traditional and renewable businesses.
• Building organizational cultures that embrace change and innovation while maintaining operational discipline.

Organizations that recognize this reality and invest proactively in identifying, developing, and retaining energy transition leaders will position themselves to thrive in the decades ahead.

For organisations seeking to discuss their leadership strategy, Boyden's Energy and Private Equity & Venture Capital Practices offers the global expertise and local insights necessary to identify, evaluate, and place the executives who will drive success in your business.